Tax Cut Lunacy

By E. J. Dionne Jr.
Tuesday, February 7, 2006

The roots of our fiscal madness, on display once again yesterday with the unveiling of President Bush's new budget and its deficit in excess of $350 billion, were planted on Oct. 27, 1990.

Ironically, that's the day when the first President Bush embraced the last genuinely bipartisan budget reduction package to include both tax increases and spending cuts.

It can be seen in retrospect as one of Bush 41's admirable long-term achievements. (Another, of course, was his success in driving Saddam Hussein out of Kuwait.) In tandem with Bill Clinton's tax increases three years later, the 1990 agreement set off a decade of fiscal responsibility and exceptional economic growth.

But Bush 41 could not embrace his budget victory as a triumph, because the agreement split his party and because he had won election just two years earlier promising "no new taxes." So he backed away from his achievement as soon as it was in hand.

There is something lovable about the way the elder, broccoli-phobic Bush talks, and what he said on that late October day proved to be significant:

"I feel that every once in a while the president has to do something he doesn't like and that is to compromise. . . . I can't say this is the best thing that's happened to us since sliced bread or the elimination of broccoli . . . . It has got some good things in it. But if we were doing it my way . . . it would be very, very different. . . . So please don't ask me to relive the agony of a budget agreement that I am glad is signed and is now behind us."

Never again would the Republican Party compromise and "relive the agony of a budget agreement" that involved tax increases. That is definitely "behind us."

Ever since Bush 41's defeat in 1992, Republicans -- especially Bush 43 -- have committed themselves to the proposition that they will never, ever cross the tax-cutting Republican right. Taxes will be cut in good times and in bad. They will not be raised, no matter how much the government decides to spend. If preserving Republican unity requires throwing the entire cost of the war in Iraq onto the next generation, go for it. Does the Pentagon need big spending increases? Fine, but don't even think about paying for them with new taxes.

Tax cutting is now the idol of the Republican shrine.

And so far the party's theological attitude toward taxes has been amply rewarded. When Clinton's tax increases went through in 1993, not a single Republican -- not even one of those so-called moderates -- voted for them. And because the benefits of the 1993 tax increases did not start kicking in until later in the decade, the Democrats were routed in the 1994 midterm elections.

Deficit hawks harp on the costs of programs for the elderly. The retirement of the baby boomers will indeed be expensive, in large part because of increases in health care spending. So some of the cuts in Medicare reimbursements that Bush proposes in this year's budget might make sense. But Bush's long-term spending cuts are dwarfed in this budget by his proposed tax cuts, and Medicare reductions should not be debated independently of their effect on the rest of the health care system.

Yet if Republicans suffer from Bush 41's tax increase trauma of 1990, Democrats suffer from the Clinton health care trauma of 1994. Rational discussion of our fiscal problems will be blocked as long as politicians indulge their twin phobias about tax increases and comprehensive health care solutions.

And sane budgeting will be impossible unless the sometimes self-righteous deficit hawks get off their exquisitely nonpartisan Mount Olympus and forcefully challenge the Republican Party's worship of tax cuts.

In particular, they should press moderate Republicans to act publicly on what they know privately: No matter how much conservatives talk about cutting spending, they will never cut enough to pay for their extravagant tax reductions. That is the lesson of Monday's budget, and of every budget this president has put forward since Sept. 11, 2001.

Bush 41 may have made campaign promises on taxes that he couldn't keep. But when it came down to it, he held to what now seems like the antiquated view that government should try to keep some balance between what it spends and what it raises in taxes. That may not have been the best idea since sliced bread or the elimination of broccoli, but it is still a good idea.

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